Wells Fargo Advisors names electric utilities as the chief beneficiary of AI and data center spending now driving stock market performance, pointing to dividend yields near 3%.
Key Points:
- Wells Fargo Advisors ties recent stock market strength to spending on AI and data centers.
- The firm calls electric utilities the sector likely to gain the most from that buildout.
- Natural gas distributors, producers and pipeline operators benefit too, but on a smaller scale.
Wells Fargo Backs The Utilities Trade
The firm made the case in its weekly market commentary, tying recent equity strength to money pouring into AI systems and the data centers that run them.
Utilities rank among the clearest winners of that spending, it said.
The call comes from the bank's brokerage and advisory arm, which guides retail clients rather than running its trading desk.
Electric utilities draw the strongest endorsement.
As owners of power generation and distribution assets, they sit in the path of a long infrastructure buildout.
Many have already lifted long-term earnings growth targets into the high-single to low-double-digit range.
Paired with dividend yields of 2% to 3%, that mix supports solid total returns, the firm said.
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Electric Utilities Lead The Power Demand Wave
The pitch rests on a simple link: more data centers mean more electricity, and someone has to generate it. Wells Fargo Advisors expects that demand to hold rather than fade.
The scale explains the conviction. Industry estimates put AI-related investment in the hundreds of billions of dollars this year, with the figure expected to climb further into 2026.
Other strategists have echoed the theme.
The bank earlier initiated coverage on 33 companies across utilities and power, handing many overweight ratings and describing the demand as structural, not cyclical.
The firm also flagged natural gas distributors, producers and pipeline operators as beneficiaries, though their upside trails that of electric names.
Power becomes the constraint as AI scales, not the chips alone.
Companies that own generation, transmission and distribution can pass rising demand through to customers and book steady, regulated returns.
Wells Fargo has pushed this view for months. Back in October it told clients to get long utility stocks, and its strategists have since placed utilities and industrials alongside technology as preferred plays through 2026, calling the shift the early innings of a multiyear trend.
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